Tax Code

  • Digital Audio Visual Works - streamed - subscription - with conditional rights

    • txcd_10402200 - This tax code is designed for streaming services that provide digital audio-visual content (like movies, TV shows, music) on a subscription basis, where the subscriber has conditional rights to access the content (e.g., they can only access it while their subscription is active).
    • This code is ideal for platforms like Netflix, Spotify, or any service that offers on-demand streaming of digital content as part of a recurring subscription model. It indicates that the service is a digital streaming subscription, which can help with tax calculations and compliance in various jurisdictions.

  • Live Events: If you offer live events (like one-off pay-per-view) that are not part of the standard subscription, you should instead use txcd_10402300 (Digital Video Streaming - live events - limited use) for those specific items

MCC

  • MCC 4899 (Cable, Satellite, and Other Pay TV/Radio/Streaming)
    • This is the industry standard for streaming video and audio services (e.g., Netflix or Spotify-style platforms).
  • MCC 5817 (Digital Goods – Applications)
    • Use this if your streaming service is delivered primarily through a specialized standalone application rather than a standard web platform

RECOMMENDATION

  • Primary Recommendation: MCC 4899 (Cable, Satellite, and Other Pay Television and Radio Services)
  • Why: It is the industry standard for on-demand or live streaming content platforms.
  • Authorization Benefit: Banks recognize this code as a recurring subscription model, which significantly improves authorization rates for your international subscribers compared to generic codes.
  • FX Access: This code is generally eligible for Stripe’s full range of FX services, including Adaptive Pricing, provided your account is in good standing.

How MCC Changes Your Stripe Experience

  • Interchange Fees: Your MCC determines the base cost of every transaction.
    • “Low-risk” categories (like grocery stores) often have lower fees than “high-risk” or digital categories.
  • Payment Method Access: Certain payment methods are only available to specific MCCs.
    • For example, local payment methods like PayNow have prohibited business lists linked to specific MCCs.
  • Industry Metadata: Specific MCCs (Travel, Lodging, Car Rental) unlock extra fields in the API to provide “enhanced data,” such as flight numbers or check-in dates, which can improve approval rates.
  • High-Risk Restrictions: If your MCC is flagged as “high-risk” (e.g., adult content, gambling), Stripe may require a rolling reserve—where a percentage of your funds is held for a period—or could lead to account termination if the industry is altogether unsupported.
  • Spending Controls (Stripe Issuing): If you use Stripe Issuing to create cards for your team, you can use MCCs to restrict where those cards can be used (e.g., “only at travel-related merchants”).

MCC and Dashboard Access

While Stripe does not typically hide entire dashboard tabs based on your MCC, it uses the code to determine your eligibility for specific Payment Methods and Financial Features.

Restricted Payment Methods

  • Certain payment methods are only available to specific industries. If your MCC (like 5734) suggests you are a retail store but you are actually a streaming service (4899), you might face issues with:
  • Bank Debits (e.g., SEPA, Bacs): Often restricted for “high-risk” or purely digital goods MCCs because they have long chargeback windows.
  • Buy Now, Pay Later (e.g., Klarna, Affirm): These providers often have their own internal lists of restricted MCCs. For example, some may not support digital subscriptions or “pseudo-cash” digital goods.
  • Local Wallets: Some regional wallets in Asia or Europe have strict prohibitions against specific digital content types (like certain adult or gaming-adjacent content) linked to your MCC.

Industry-Specific Data Fields

  • Stripe unlocks extra API functionality for specific MCC groups. While this is most common in travel (like flight or lodging data), accurate streaming MCCs help with:
    • Enhanced Authorization: Providing more granular data for MCC 4899 (Streaming) can lead to higher authorization rates as banks recognize the “subscription” pattern and are less likely to flag it as fraudulent software.

Financial Controls & Issuing

  • If you use Stripe Issuing (creating your own cards), you can use MCCs to:
  • Set Spending Controls: Restrict where your corporate cards can be used based on the merchant’s MCC (e.g., blocking cards at “Entertainment” or “Streaming” merchants).

Risk & Compliance

  • Rolling Reserves: If your MCC is classified as “high-risk” (common for digital streaming with high chargeback rates), Stripe may enable a Rolling Reserve on your account, holding a percentage of your funds for a set period.
  • Prohibited Business Toggles: If your MCC belongs to a restricted category (like certain adult streaming or gambling), Stripe may disable your ability to process payments entirely until a manual review is completed.

MCC and Fees/Fx

Yes, your Merchant Category Code (MCC) significantly affects your access to and the cost of Stripe’s Foreign Exchange (FX) services.

API Restrictions:

  • Stripe explicitly restricts certain MCCs from using the FX Quotes API, which allows you to lock in exchange rates for up to 24 hours. If your streaming business is misclassified (e.g., under a “high-risk” or “financial services” code), you may be blocked from this feature entirely.

Pricing & Fees:

  • Higher Conversion Fees: MCCs identified as “high-risk” often face higher currency conversion fees on cross-border transactions compared to standard codes.
  • Interchange Influence: Your MCC determines the interchange fee, which can combine with FX fees to reduce your overall profit margin on international subscribers.

Financial Service Prohibitions:

  • If you are classified under an MCC related to money transmission or currency exchange (e.g., 6051), you may be ineligible for standard Stripe services as these often fall under Prohibited and Restricted Businesses.
  • Instant currency conversion is strictly for business operations; using it for for-profit trading is prohibited.

Eligibility for Advanced Features:

  • Adaptive Pricing: This feature, which localizes prices for international customers, is generally available but relies on your MCC being in good standing with card networks to ensure high authorization rates during the conversion process.
  • Multi-currency Settlements: To avoid FX fees by settling in the same currency as your customers, you typically need to be in a supported industry that isn’t flagged for high-risk monitoring.